INVESTMENT
transplant the experience , amenities , and service levels of a luxury hotel to a camping site in the Tetons or some other iconic or rejuvenating location ? While drawing inspiration from great experiential lodging venues across the globe , a variety of formats have done well in the United States before and during the pandemic environment , with its emphasis on social distancing for safety and enjoying more wide-open spaces .
Overall , experiential lodging appeals to developers for its low barriers to entry ; expression of personal values , including environmental and health consciousness ; aesthetic sense ; and , not to be neglected , potential for outstanding daily rates plus total room spend . Staying in a high-end trailer or luxury tent , with all the trimmings , can command upwards of US $ 500 to US $ 5,000 a night in season .
Interestingly , due to the total startup and administration costs , including property acquisition or leasing , the total development costs per key for these projects might not be that much less than for some bricks and mortar hotel platforms . The real appeal is the revenue and market share potential of exploring a newer , growing hospitality niche , along with those aforementioned entrepreneurial urges .
Leading players in today ’ s experiential lodging universe include Luxury Frontiers , AutoCamp , Getaway , Under Canvas , Collective Retreats , and Sagra Farms , an exciting agricultural hospitality and educational concept . Equity investors and lenders include some of the smartest players in the hospitality space and have included Starwood Capital , Certares , WhitmanPeterson , KSL , Gaw Capital and Blackstone .
AS MARKETS MATURE At present , the existing cash flow and unleveraged yields on cost are attracting investors to the experiential lodging opportunity . However , we must recognize the limits of institutional capital in an area where deal sizes are small , maybe on the order of US $ 5 million to US $ 30 million ; ownership is extremely fragmented ; and branding is nascent . Financing is also more complicated , as much of the collateral for these concepts “ acts ” more like personal property than real property . That luxury tent , albeit an expensive one , or Airstream , can always be moved .
Thus , the relatively nascent state of this sector implies there will be efforts to roll-up multiple platforms to create institutional scale . The interest and efforts to fund and instigate merger and acquisition activity have already started . There are clear economies of scale to be achieved in the areas of administration , reservation systems and marketing , as the present players must invest in comparable infrastructure to manage what is still a relatively small base of properties . As transaction activity increases , so will liquidity , along with a clearer handle on asset valuation .
Overall , the apartment-hotel hybrid and experiential lodging are exciting new hospitality spaces , less competitive than other segments of commercial real estate and with excellent growth potential . With scale , some of the major brands will begin to stake out a role in both of these consumer-led markets .
Collective Retreats and Outdoorsy have teamed up for new luxury outdoor experience